The Idaho Public Utilities Commission has begun an
approximate three-month process of considering Idaho Power Company’s
application for a certificate to build a 330-megawatt natural gas-fired power
plant four miles south of New Plymouth.

Idaho Power claims the proposed Langley Gulch Power Plant is
needed to meet growing demand from customers.

This week the commission announced the issues it will
consider in the case as well as a procedural schedule that includes a July 14
technical hearing that could continue through July 16 in the commission hearing
room at 472 W. Washington St. in Boise.

According to Idaho Power, the plant will cost $427.4
million. If the commission issues the certificate before Sept. 1, construction
would begin during the summer of 2010 and the plant would be commercially
operational by December, 2012.

Several parties have intervened in the case to present
testimony and cross-examine witnesses. They include the Industrial Customers of
Idaho Power, Invenergy Thermal Development LLC, Idaho Irrigation Pumpers
Association, Snake River Alliance, Idaho Conservation League, the Northwest and
Intermountain Power Producers Coalition and commission staff.

Among the issues to be considered are the need for the
additional resource, the fairness and transparency of the bid selection process
and the ratemaking treatment.

Idaho Power’s supplemental testimony is due April 28.
Commission staff and intervenors must file their testimony by June 19 and Idaho
Power’s rebuttal testimony is due July 2. The testimony will be available on
the Commission’s Web site at www.puc.idaho.gov.
Idaho Power’s application and its pre-filed testimony are currently posted on
the Website. After going to the site, click on the electric icon, then on “Open
Electric Cases,” and scroll down to Case No. IPC-E-09-03.

The
commission is also accepting public comment on this matter. Comments are
accepted via e-mail by accessing the commission’s homepage at www.puc.idaho.gov and clicking on
"Comments & Questions." Fill in the above case number and enter
your comments. Comments can also be mailed to P.O. Box 83720, Boise, ID
83720-0074 or faxed to (208) 334-3762.

Idaho Power proposes to build the plant on 137 acres of
undeveloped range land adjacent to Interstate 84, immediately southwest of Exit
9 in rural Payette County.

The company’s long-range plan to meet customer growth,
called an Integrated Resource Plan, initially called for a coal-fired resource,
but with rising concerns about climate change, the company revised its plan to
call for a natural gas-fired baseload resource. The company initiated a bid
process, reviewed by an independent third party. It received five valid
proposals that represented 13 possible gas-fired sources, including purchase
agreements from other plant owners.Idaho Power claims building its own plant will have a revenue
requirement impact of about $108 million lower than the next least expensive
proposal.

To improve its chances at receiving financing at the lowest
possible rate, Idaho Power is asking the commission to 1) allow the company to
receive funds for Construction Work in Progress (CWIP) while the project is
being built or 2) receive preapproved ratemaking treatment under the process
outlined in Senate Bill 1123, recently signed by Gov. Butch Otter.

Under the CWIP option, Idaho Power would submit annual
filings reporting annual construction expense. After a PUC staff audit,
approved expenses would be included in customer rates. Idaho Power asserts that
CWIP allows customers to help fund construction while the plant is being built,
thus avoiding financing costs. It would also reduce rate shock for customers,
the company says, by smoothing the rate increase over the construction period
rather than a one-time increase at construction’s end.

If CWIP is not approved, Idaho Power wants to receive
ratemaking assurances ahead of time, as envisioned in Senate Bill 1123. Those
assurances include statements within the order granting the certificate that:
1) the commission concurs with the need and size of the plant, 2) that it
accepts the project cost commitment estimate, 3) that it will allow Idaho Power
to seek recovery of expenses above the estimate if those expenses are justified
by the commission, 4) that cost recovery from customers can begin when the
plant begins full commercial operation and 5) that the return on equity the
company earns from the investment would be the authorized rate of return in
place at the time the project becomes operational.

Transmission costs are estimated to be about $25.4 million
and will include construction of a new 18-mile 138-kV line from the plant to
the Caldwell-Willis line, three miles from Caldwell Substation. Building
generation on the west side of the Treasure Valley will improve reliability in
the Caldwell-Ontario area, the company said. The plant should also make it
easier for Idaho Power to accommodate intermittent resources like wind or solar
because a natural gas baseload plant is able to change generation quickly to
maintain system balance.

The proposed plant would require a labor force of up to 120
during the two years of construction and employ 18 full-time once it is
operational.